Socialized Corporate Market...

[Solon]

Jan Michael's thread on Wally world is interesting, however, I believe it was too specific. To look at systematic problems with our economy, we have to look to the entire market, and how it actually works. First things first, there is no such thing as a Free Market, there never was and never will be in this country. Our Markets are divided, roughly, into three parts, Regulation, and Government Supported/Sponsored (Socialism for the Rich?), and Tax Breaks.

I'll touch upon Government Supported Systems first, all markets, even those that predate modern capitalism, were supported in some way by the governments of the day. The various trading companies of the European Empires is an excellent example of that. Fast forward to the 19th century, and you will see many examples of Government favoritism, support, and propping up, of several business. Many of them are around today, Examples include Western Union, AT&T, Various Railroad and power companies (Immanent domain, land giveaways, tax subsidized infrastructure). This would also include local utilities that are in many cases outright owned by their respective municipal governments.

In fact, when taken together, the government has, in many cases, outright supported companies with taxpayer dollars in one way or another. This is not a negative thing from the outset, however, negative things came about because of many of these policies because of the lack of the next item: Regulation. The biggest mistake is to give up control of the basic infrastructure that the government created in the first place.

The Government, traditionally, has usually sided with big business in regards to regulation. Back in the 19th century, this was in the form of taking business's side in labor disputes, leading to clashes between our armed forces and strikers. Also due to lack of regulation, we had the first Super Rich in the country, the Robber Barons. Even by today's standards, many of them were many times richer than Bill Gates could ever hope to be, adjusted for inflation. It wasn't until Upton Sinclair wrote "The Jungle" that regulation of businesses first started being seriously considered. Theodore Roosevelt signed the first bill regulating the Meat Packing Industry, all because of a novel, believe it or not.

Between his Administration and Woodrow Wilson, almost nothing new was on the table in regards to regulation. During this time, due to the Gold Standard, banks were issuing loans and notes that were not backed up by hard currency, and they defaulted at a great rate during the Great Depression. Due to horrendous corruption in the stock market, it ended up crashing because of companies overvaluing stock and several underhanded dealings. This we all know, it was the lack of government oversight that allowed for the conditions in the first place. This changed with the New Deal and the Massive public works programs of FDR.

Now were are on tax breaks, usually these are made to attract business to certain areas and cities. The problem is that these deals can last for several years, and with limited economic benefit to the area, especially when there is a NET loss in jobs. For example, as in my area, we used to have 4 chains of dept. stores in the area, K-Mart, Wal*Mart, Target, and Venture(Local owned). All of them employed over a hundred employees each, so far we lost 2 of them, and the others cannot and will not absorb those additional employees, leading to a total net loss in jobs. This impacts the economy in the area negatively, and sometimes in drastic ways. Ours is blunted because we live near a major metropolitan area. But then again, the Help Wanted ads only run about 2 pages, mostly for Rn's, so maybe not so good.

The problem is that the Republicans in Congress and the LDC enablers basically want to roll back the regulations but to increase the other two. This is a disaster waiting to happen, it will usher in a new era of Robber Barons, with all the disasters that occurred similarly to what happened in the late 19th century. They know that the market isn't free, but the perpetuate the myth and attack any opposing viewpoint as Communism or Socialism.

To give another example, let's say GE agreed to supply a small farming community with electricity (FDR's Rural Electrification Plan). This is a small community that is out of the way, therefore it is expensive to run lines to said community because the population cannot cover the cost. A deal is struck, the Government will step in and cover many of the costs, either directly, or through tax breaks. However, there is a catch, the Government has to put control on the prices charged to the customers because this becomes a "Natural" Monopoly. This is positive for the community, plus the costs are distributed more evenly throughout the rest of the population of the country, let's say at half a cent a year.

Now the Republicans will deregulate the price controls, and GE, now free of such restrictions, start charging at "Fair" Market prices. The government doesn't give up on the subsidies, but will charge all of us half a cent for that, plus the community in question is now charged at double or triple the previous rate. This is how Trickle Down economics works, even though it is more like Pissed On Economics. This can be even more dramatic with Anti-Trust laws being weakened, because an unregulated Market "Naturally" ends up with monopolies over various industries and services.

This is why I find it so infuriating to give any Corporation an inch, because, inevitably, they take the proverbial mile.

[JanMichael]

1. This ought to be a great thread. You've laid out much of what ails us.

And we are headed for disaster with this move to deregulate/privatise/outsourse every good or service regardless of it's societal utility.

Hopefully the trends will reverse prior to the US just changing it's name to The Banana Republic...

[MisterP]

2. the unstable loans and stocks continued well past Wilson--

in fact, it reached its heyday in the Roaring 20's--Harding (a relative of his was a classmate of mine), Coolidge, and Hoover

[Tierra_y_Libertad]

3. Also, our military is used to protect these bloodsuckers.

Which we, fortunate taxpayers, pay for.

[Jose Diablo]

4. Yep, you have hit the nail squarely with the hammer

Now bring-up the social costs of monopoly/mercantile capitalism in the form of social instability and we can see our future.

But I think those trying to take us back want social instability because they think they can then use the 'special weapons' military and police state apparatus to protect themselves, much like pre western contact China did for 3000 years. They overestimate the complexity of the weapons systems and where are the armament systems actually stored, why right here in our communities.

These idiots never cease to amaze me. Why do we allow these types to continue is beyond me. We fight them then let them retreat for another shot at us at some future date.

We have been too generous with them in the past.

[JanMichael]

5. kick

:kick:

[JanMichael]

6. One last kick with the hope that it'll catch on.

:kick:

[RememberTheCoup]

7. I have a related question...

Aren't all corporations by definition Government Supported Systems? I mean, they aren't really subject to the "survival of the fittest" paradigm the way Repubs and Libertarians like to pretend. They have to get a charter to be incorporated, right? And they have to have a board of directors to represent the stockholders. And if a corporation is sued, the owners (stockholders) know that their personal wealth will never be in danger. Why don't these "free market" proponents object to this unnatural fusion of private business and government. I say it is because they are really fascists (or corporatists) at heart.

[Solon]

11. Actually yes they are...

The problem is enforcement, I don't get it, but corporations should not have, say, bankruptcy protection, when personal wealth is already protected in the charters. I also think that the charters have been broadened too much, in the past, charters were given for specific services or markets. In cases such as Enron, if the government had the power, then they should have revoked the charter as a breach of contract with the workers. Liquidate the assets, compensate all workers who had their 401ks taken away, make up any back taxes, then distribute the rest of the money back to the shareholders, depending on their percentage of ownership. I don't understand why Corporations should have any protection from the state, nor why they should have a day in court at all, they are not citizens, only organizations for profit, outside the protection of non-profit organizations, they deserve no legal protections.

[the_outsider]

8. Great post

Chomsky has done some solid number-crunching research on how Reagan and Thatcher enabled some of these in 80s and how much of protectionists they really were while espousing "free trade". Protected by federal governments domestically and by US military and trade organizations globally, the multinational corporations believe in anything but fair competition.

Increase of globalization will play into it and could accelerate the downfall IMO. Compared to the era of rubber barons, it's so much easier now to move jobs and capital around the world. Without government regulations, it's extremely likely that these trends will create an extremely top-heavy distribution of wealth and growth. The capital will be concentrated in a very few hands and will move in and out of any market in the world so quickly that it would be useless for any sustained infrastructure development projects. Labor rights will disappear and wages will continue to fall as the poor workers compete globally instead of locally. Research and innovation will stop as the government will have no money to fund them and the very few wealthy individuals will be more interested in finding the next big market opportunity for short-term gains than in R&D. They will not be committed to the growth of any community in particular.
The Gini coefficient will increase all over the world. We are definitely seeing some of these disturbing trends. Hopefully we can start to reverse some of these pretty soon and IMO it has to be a global effort.

[Solon]

9. Another Kick by me....

BTW: Someone brought up social instability, and that is definately true, however, there is an even more insidious motive: Destroying the middle class. The problem with the middle class is this, they are just well off enough to actually want to improve their lot in life, and they are just poor enough where the rich can screw them, because most are working class. Think of all the great social movements of this century and the last, most were instigated by those who were not the poorest members of society, but were the Middle Class. They have the education, time, money and motive to foward the lives of everyone, which is a direct threat to those who leech off of society to enrich themselves. Our most poorest members of society are working hard just to make a living, and when you have to scrape quarters to buy milk, your problems are more immediate and politics seems unattainable. This is of course a generalization, but one that has held true in history, with a few exceptions.

[unkachuck]

10. I second that....great post...

I think all economies are 'planned', it's just a question of who's doing the 'planning' and how much control the average slob, like me, has over that 'planning'....

We can attack it from the bottom with unions, labor laws, etc. or from the top with a socialist 'planned' economy.....but 'capital' always seems to find it's way to the levers of power through any political system.....because the people who control political systems are relatively few in number to the general population and can therefore be cost-effectively purchased....

We need an economic system totally seperate from the political system.....and the way we do that is to divide the cost of corruption over as many people as possible by going to a Direct Democracy!

.....the federal government would issue secure voting ID's as would the respective state and local governments.....and we would all introduce and vote for legislation over a verifiably secure internet-like system....

[Solon]

12. Thank you for the praise...

I will say a couple things about your post though that I respectably disagree with. While I agree that the economy is planned to some extent, but its not to the extent that lets say the USSR or PRC. Actually the lack of a long term plan is why some problems are becoming manifest now. Most companies do not plan for more than 2 quarters, much less a decade or two. The problems with this is that law of unintended consequences, like strip mining, or chemical plants next to natural aquifiers/water sources. We had a neighborhood in a St. Louis county city that had to be evacuated because of situations like this (chemical plant contamination). One of the basic problems is that both the political and economic system is linked to a great extent. The Government controls the Mint, and therefore controls the economy to a degree.

As far as the idea of Direct Democracy, well, its like most political systems out there, good on paper, bad in real life. Well maybe not bad, more like impractable. While I feel that our current system is wanting, there are ways to improve it that don't require a total rebuilding. For one, we should make are representatives more responsive to the people. One way to do that is to get rid of the districting system, which is rife with corruption itself, and disenfranchises large numbers of people because of geography, and move to an at-large (by state?) proportional representation system. This includes getting rid of the artificially low number of reps we have now, it has stayed the same at 435 congressmen for almost a century, a century where the population of the nation has more than tripled in that time.

This is not to say the Direct Democracy is bad, in fact, I would say it is good, in limited forms. For example, I would recommend that declaration of wars and reinstating drafts be done by referendum. Combine this the Campaign Financing Reform and you can eventually get a government that responds to the people and not big moneyed interests.

As this is done, we can finally form a government that can actually put a leash on that pack of wild dogs that are Corporate America. Also, if one of them strays too far, and fines don't seem to help then it becomes rabid and has to be put down. If the government would actually step in and use the biggest bargaining chip this country has: buying power, and strengthens it then they could actually use it as a club to beat back the pack. This could be effective in outsourcing and other areas that are currently lacking in the regualation dept. Its so simple, close a plant here in this country to save costs, no longer do business here either, not selling, nor buying, and your assets in this country are seized as well. That would put them in line, and add to it new international treaties and organizations that focus on SUSTAINABLE LOCAL development of third world countries with NO intereference of their governments and then maybe we could have a true global economy that MINIMIZES exploitation, instead of MAXIMIZING it as they do now.